2018 (8) TMI 277 - AT - Income Tax

Addition observing undisclosed receipt - system of accounting followed - Held that - As assessee has submitted that the assessee is following cash system of accounting and since the said amount after deducting TDS was actually received by the assessee only in the previous year relevant to AY 2014-15, the same has been duly offered to tax in AY 2014-15. He has contended that this claim of the assessee can be verified by the AO before allowing the relief to the assessee. Since Ld. DR has not raised any objection in this regard, direct the AO to verify the claim of the assessee and allow proper relief on such verification. Amount earned as interest on PPF - whether it being exempt from tax ought to have been allowed as exempt income - Held that - As assessee has contended that this claim of the assessee also can be verified by the AO before allowing the relief to the assessee. DR has not raised any objection in this regard. Accordingly, this issue is also restored to the file of the AO for deciding the same afresh after verifying the claim of the assessee that the amount in question represented interest on PPF account received for the earlier years. Addition of sum credited in the Capital account - Held that - Respectfully following the order of the Tribunal on the similar issue in assessee s own case for AY 2010-11, set aside the impugned order of Ld.CIT(A) for the year under consideration on this issue and restore the matter to the file of the AO for deciding the same afresh as per the similar directions as given for AY 2010- 11.

Summary

Issues:
1. Disallowance of undisclosed receipt and TDS
2. Disallowance under section 14A
3. Excess credit of interests on PPF
4. Foreign remittance
5. Disallowance of motor car expenses

Issue 1: Disallowance of undisclosed receipt and TDS
The assessee, a doctor by profession, filed a return declaring a total income of &8377; 27,13,591/-. The AO determined the total income at &8377; 48,90,467/- after various additions, including undisclosed receipts, TDS, disallowance under section 14A, excess credit of interests on PPF, foreign remittance, and motor car expenses. The CIT(A) confirmed most additions, reducing only the disallowance of motor car expenses. The assessee appealed to the Tribunal, challenging the additions. The Tribunal directed the AO to verify the claim of the assessee regarding the undisclosed receipt and TDS, allowing relief upon verification. The addition of &8377; 44,420 was confirmed, and the appeal was partly allowed for statistical purposes.

Issue 2: Disallowance under section 14A
The assessee did not press the issue of disallowance under section 14A, resulting in its dismissal.

Issue 3: Excess credit of interests on PPF
The assessee claimed that the amount of &8377; 52,820 represented interest earned on a PPF account but credited to the P&L account of the relevant year. The Tribunal directed the AO to verify this claim before allowing relief, treating the issue as allowed for statistical purposes.

Issue 4: Foreign remittance
The Tribunal referred to a similar issue in the assessee's case for AY 2010-11, where the matter was restored to the AO due to the unavailability of documentary evidence. Following the precedent, the Tribunal set aside the CIT(A)'s order and restored the matter to the AO for fresh consideration, treating the issue as allowed for statistical purposes.

Issue 5: Disallowance of motor car expenses
The CIT(A) reduced the disallowance of motor car expenses from &8377; 3,20,236 to &8377; 1,60,118. The Tribunal treated this issue as partly allowed for statistical purposes.

In conclusion, the Tribunal partly allowed the assessee's appeal, directing the AO to verify certain claims and restoring other issues for fresh consideration based on the precedents and submissions made during the proceedings.